Liberty Star Uranium & Metals Corp. (OTC:LBSR) moved between the 50- and the 200-day moving averages yesterday on huge trading volume. Yesterday, the company announced the closing of a funding agreement that LBSR seemed in a dire need of recently. 
The session closed with a 26.92% increase in the price at $0.033 for a share. LBSR crossed the 50-day moving average which is going down and is now at $0.0239, and the 200-day moving average at $0.0364. However, the trading volume was 9.52 million traded shares for the day, and although a few times higher than the daily average, it could not top the record from the middle of December.
Some big news came out yesterday to cause such action. Liberty Star announced that it had signed a funding agreement with Fairhills Capital Offshore Ltd. Under the agreement, LBSR can sell to the investor shares of its common stock for a total amount of $10 million, whereby the shares would be issued and sold on a Put Notice by the company.
The shares would be sold at a 27.5% discount to an average market price from the five days preceding the Put Notice, and LBSR has reserved 200 million shares for issuance under that agreement.
As LBSR reported $182,000 in cash as of end-October last year against $4.1 million in accounts payable and in long-term debt due in short, the company must be in a dire need of cash to satisfy its liabilities, and not that much to invest in its exploration program.
Therefore, shareholders could be diluted very soon, and that could have an immediate effect on the market. LBSR has taken the obligation to register the new shares with the SEC even before their issuance so that they are freely tradable when issued.
